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MBA Degree Loses Some Of Its Lustre As Fast-Track Masters Thrive

Since the financial crisis, managers have been reluctant to give up careers in order to attend business school. The focus is switching to shorter, accelerated programs.

Mon Feb 2 2015

BusinessBecause
Brandon Segal, one of an executive team behind fast-growing retail start-up Dr Segal’s, is the new breed of business school student. His Vancouver-based venture is trying to marry centuries old commerce with new technology. He is taking Canada’s clothing market by storm.

“Continued growth and expansion is on the top of our list,” says Brandon. The start-up’s products are already in 850 retail stores across the country. Dr Segal’s produces fashionable compression socks, targeting younger consumers, among other customers.

Brandon illustrates two shifts in the business education space: a push towards entrepreneurial careers, and a divergence from the two-year MBA. When he applied to business school in 2009, a Masters in Management (MiM) was all the rage.

“Entrepreneurship is probably the most multi-faceted thing I’ve done in my life,” says Brandon, a graduate of the Master of Management program at Sauder School of Business. “You are never going to know everything about business, but the MoM program gives you a good foundation,” he says.

A decade on from the MBA’s nadir in 2002-03, the degree has lost some of its lustre. Since the financial crisis, managers have been reluctant to give up careers in order to attend business school, which can cost well over a hundred thousand dollars.

The focus is switching to shorter, accelerated programs. They are cheaper and often honed to specific industries. A masters of entrepreneurship, supply chain management or business analytics may offer more bang for your buck.

“There is increasing demand for ‘specialized’ masters programs that best fit individual needs, versus demand for one-year or two-year programs,” says Maura Herson, MBA program director at MIT Sloan School of Management in the US.

The top few MBA programs go from strength to strength, but further down the chain a squeezed middle is emerging. This is a problem that US business schools in particular face. A two-year MBA has been the standard format in America.

Over the past year a number of schools in the US have closed their traditional MBA programs – the Thunderbird School of Global Management, Wake Forest University and Virginia’s Pamplin School of Business are high-profile examples – with many opting to focus on flexible and online learning. This trend is likely to increase.

“The business education industry is at the beginning of a sea changes,” says Elaine Romanelli, senior associate dean for MBA programs at Georgetown’s McDonough School of Business in Washington. “I don’t think we’re going to see as many MBA programs in the US.”

Europe’s one-year MBA model is increasingly attractive. The Graduate Management Admissions Council said there were 189 one-year MBA programs in 2014, compared to 173 four years previously.

Cornell’s Johnson School recently launched a one-year MBA program based in New York, for instance, while Goizueta Business School in Atlanta launched a fast-track version of its MBA four years ago.

This has trend is also seen in markets like India. The pre-experience, one-year PGP program is widely taught by the prestigious Indian Institutes of Management. At the Indian School of Business, nearly 800 students are enrolled each year on its accelerated year-long program.

With the worst of the economic crisis now behind us, many of Europe’s business schools have enjoyed growth in applications for their faster 12-month MBA degrees.

“In the past five years, we have seen a significant increase in prospect and applicant numbers for both our MBA and our Executive MBA programs,” says Ralf Bürkle, a director at Mannheim Business School in Germany.

But the format is more difficult to roll out in regions such as Australia, where overseas graduates must study for two years to apply for postgraduate work visas.

Yet this has seemingly not been an obstacle. International enrolments to masters programs at the University of Sydney Business School have doubled over the past five years, says John Shields, deputy dean. “Visa turnaround times have been radically streamlined,” he says.

There have been signs that the two-year MBA might make a comeback, but growth in newer management programs has been much more rapid. One of the hottest has been courses focused on business analytics.

Interest in specialized, one-year masters programs related to big data has surged. The analytics course at USC's Marshall School of Business, for instance, received 300 applications for just 18 places, says Yehuda Bassok, chair of the data sciences and operations department.

There is a feeling that recruiters value such specific skills. “There is great demand for analytical skills in marketing, finance, supply chain and information management,” says Jennifer Whitten, director of career services at Arizona’s W.P Carey School of Business.

The increase in provision of online learning is also taking market share away from the full-time MBA. Growth in applications to part-time programs is being driven by innovation in learning technology.

“The market of university and post-graduate education has recently witnessed a steep growth in digital learning MBA [programs],” says Federico Frattini, director of a blended EMBA program at MIP Politecnico di Milano, a leading Italian business school.

Recruiters are increasingly hiring more people from pre-experience masters programs. According to a recent survey of recruiters by GMAC, those from specialized programs in finance, accounting and management are particularly in demand.

“MiM programs are becoming more popular in the US because of demand from both students and employers,” says Derrick Boone, associate dean of the MA in Management program at Wake Forest.

Where the two-year MBA might have an edge over masters students' careers is in the mid-point summer internship.

“A huge proportion walk away from internships with a job offer in hand,” says Elaine at Georgetown McDonough. “That has shown increase over last several years,” she says.

In such a radically changing education market, business schools’ brands and reputations are increasingly important. Students may be willing to overlook program length to study at a high-ranking institute.

“The MIT brand is far more important to the applicants than the length of the program,” says Rod Garcia, the senior director of MBA admissions at MIT Sloan.

“Given a choice between attending a top one-year program or [a] two-year MIT Sloan MBA program, there is no doubt that the majority would choose to attend the two-year program.”

But the future of the full-time MBA remains hard to predict. “I don’t think all two-year MBA [programs] will sustain themselves,” says Elaine at Georgetown McDonough. “I think we’ll see a smaller number of elite MBA programs, and below that a much more varied offering.”

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